What are the principal differences between SEC Registered Investment Advisors and stockbrokers?
Registered Investment Advisors (RIA’s) are regulated by, and have filed a Form ADV with, the Securities and Exchange Commission. This form presents detailed information about the RIA, including past history of the advisor’s firm, the education and experience of the firm’s principals, investment management style, legal actions, if any, taken against the firm and its principals, fee structure and many other relevant pieces of information which an individual should consider when hiring an investment manager. RIA’s acknowledge their fiduciary status to their clients. Fiduciaries are held to a higher standard of professionalism than are non-fiduciaries. Most RIA’s are fee-based, rather than commission-based, and manage portfolios of investments on a discretionary basis. Client assets are typically held at an independent custodian such as a bank or brokerage firm. Investors who prefer to take full responsibility for their investment decisions might utilize a stockbroker directly, paying a commission for each transaction.
Why would I use a Registered Investment Advisor rather than invest through mutual funds?
In an investment advisory relationship, the client’s specific goals, investment temperament and risk-taking capability are considered by the investment advisor when structuring a portfolio. Communication is two-way. A mutual fund has its own investment style and the investor must decide if that style is appropriate for his/her needs. Communication is one-way from the mutual fund in the form of quarterly and annual reports, and specific investor needs are not taken into account. An investment advisory relationship has the advantage that taxes can be controlled at the client level. Mutual funds operate as one large pool without taking any one investor's tax situation into account.
What is the minimum amount of assets and\or cash that Sheffield Investment Management (SIMI) will accept?
Our minimum client relationship is $500,000.
Do I have any input into the construction of my portfolio?
Client input is sought initially when a relationship begins. We discuss with each client their objectives, time horizon, liquidity and income needs and tax considerations before we begin building a portfolio. Once this framework is established and agreed upon, it is formalized through a written investment policy statement (IPS). The plan is then implemented on the client’s behalf. The mix of investments will vary among clients depending on their situation. If the client’s personal situation changes in such a manner as to cause the IPS to no longer be an accurate representation of the client’s investment profile, then client input is requested to realign the IPS with their current situation. SIMI does not solicit specific investment suggestions from its clients.
How often to you communicate with me regarding my investment portfolio?
Each client receives a quarterly statement of portfolio assets and a narrative investment report from SIMI in addition to the brokerage or bank statement received from the custodian. After the first full quarter with SIMI, this report includes a calculation of the portfolio’s return. Returns are compared to widely followed market indices representative of the performance of the different types of investments owned in the portfolio. The portfolio managers of SIMI are also always available to answer any questions by phone, e-mail, or in person that you might have about your portfolio.
What professional certifications do your employees hold?
Each of SIMI’s portfolio managers are principals of the firm and hold the Chartered Financial Analyst (CFA) designation. In addition, they are members of the CFA Institute and the Atlanta Society of Financial Analysts (ASFA). To maintain this designation, the principals agree to abide by the CFA Institute’s Code of Ethics and The Standards of Professional Conduct.
How safe is my money when SIMI manages my portfolio?
SIMI does not take possession of any of your assets. They are held by a custodian, such as a bank or brokerage firm with whom each client signs a separate custodial agreement. Investment assets held by a custodian are not comingled with the assets of the custodian. They are not subject to the claims of the custodian’s creditors, nor are they subject to the business risk of its other non-custodial activities.
The securities which comprise the portfolios of all SIMI’s clients are subject to typical market risks: the impact of inflation, governmental actions, general business conditions, etc. All securities portfolios are subject to market value fluctutation and may decline in value.
